Solar farm abandoned amid uncertainty over renewable energy target

The company planning to build one of the country’s largest solar farms has walked away from the project amid uncertainty over federal government support for a long-term renewable energy target.

Silex Systems announced on Monday that it would suspend its proposed 2000-dish solar farm near Mildura, which had been billed as being capable of producing enough electricity to run 30,000 homes.

Chief executive Michael Goldsworthy said the combination of uncertainty about the target, which requires 41,000 gigawatt hours of electricity from renewable sources by 2020, and low wholesale power prices, meant the $420 million project would not go ahead.

He said a government-commissioned review of the target being conducted by businessman Dick Warburton had affected the market’s enthusiasm for sourcing renewable energy.

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''There’s not as much pressure on the market to have renewable energy in their portfolio now simply because the [target] is at least going to be wound back and possibly abolished,'' he told the ABC

In a statement to the stock exchange on Monday, the company said it would consider a smaller project at the Mildura site.

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Stage one of the solar farm was completed in July 2013, when 40 dishes on a Carwarp sheep farm 30 minutes outside Mildura began feeding 1.5 megawatts of electricity into the grid - enough power for 500 homes.

More than $110 million in state and federal government funding for the project will be forfeited.

However, the company said it would continue discussions with state and federal governments over its plans for a smaller project, including potential funding arrangements.

Acting chief executive of the Clean Energy Council Kane Thornton said the Warburton review had affected confidence.

''The industry is basically on hold because of the uncertainty of the review ... It’s also affecting mature businesses like Pacific Hydro and Hydro Tasmania and there’s no question it makes it harder for the newer companies as well,'' he said.

Mr Thornton said 21,000 people were employed in the renewable energy sector. If the target was slashed many businesses would close and thousands of people would lose their jobs, he said.

''You'd have to be pretty reckless to make a decision that ultimately doesn’t save anyone any money on their power bills, is at distinct odds with what 99 per cent of people have asked for and will seriously damage investments and put people out of jobs,'' he said.

First launched in the mid-2000s, the solar farm project has weathered numerous setbacks including the proponent company Solar Systems going into voluntary administration during the global financial crisis. Silex Systems then bought the project, which was originally due to be completed last year.